How could Bitcoin possibly be safer than debt backed by good old Uncle Sam?
Yet that’s exactly what one CEO of a billion-dollar software company believes.
In fact, he’s put his companies’ entire cash reserves — a cool $425 million — into the digital currency.
The rationale is simple: Sooner or later the Fed’s hell-bent intention to print more and more money and keep interest rates low will catch up to them.
This inflationary action will eventually cause interest rates to rise.
At least that’s the case if you ask MicroStrategy Inc.(NASDAQ: MSTR) CEO Michael Saylor said when the Fed relaxed its inflationary policy it was the signal for him to take action.
It’s worth noting that MicroStrategy provides enterprise analytics software and services worldwide – not cryptocurrency trading.
At the time of this writing, MicroStrategy sports a $1.5 billion market cap and is sitting on $500 million dollars in cash reserves. In recent months, the CEO and his team sought ways to protect and grow the company’s cash on hand – and didn’t like their options.
U.S. Treasuries yield practically nothing, the stock market is incredibly volatile, and gold “continues to be mined” according to Saylor.
In a move that astonished onlookers, Saylor invested $425 million in Bitcoin, with the blessings of the remainder of shareholders in his company.
Saylor estimates that asset inflation will erode more than 20% a year of U.S. Dollar purchasing power which amounts to $85 million per year on $425 million.
Saylor offered that there is a finite amount of Bitcoin available, countering the potential for decreasing returns, and will continue to buy crypto with cash from operations.
In a recent interview with Bloomberg, he’s predicting other public and private companies will follow suit. “It will probably be private companies first, because they don’t have as much inertia…The public companies our size, then mid-sized companies.”
Saylor isn’t blindly committed to cryptocurrency, though, as he has indicated that if bond yields jump he would move currency out of crypto back into bonds.
“Right now this is the only thing we can find with a positive real yield.” Said Saylor.